BNP Paribas Open Summit 2024: client insights and world-class tennis

10 days, 10 conferences. This year’s BNP Paribas Open Summit in Indian Wells, California – the Bank’s flagship thought-leadership forum in the US – coincided with its title sponsorship of the BNP Paribas Open, from which Carlos Alcaraz and Iga Swiatek emerged victorious, each for the second time in the span of three years.

The Summit gathered together more than 500 corporate and institutional clients, issuers and investors from North and South America to gain insights from industry leaders, as well as BNP Paribas experts, on key topics in the markets and perspectives on how to navigate the current economic environment. Clients enjoyed access to tennis clinics led by champions Lindsay Davenport, Brad Gilbert and Patrick McEnroe, and talks by tennis legends Tracy Austin and Michael Chang.

High interest rates and the US election

One theme featuring prominently in discussions was risk management in the face of uncertainty and how to navigate a year likely to be shaped by geopolitical conflict, an upcoming US presidential election, and interest rates that may remain higher for longer.

All three could prompt significant shifts in the funding and investment landscape, according to BNP Paribas’ Chief US Economist Carl Riccadonna, who noted that those hoping for a swift decline in interest rates might be disappointed. With strong hiring momentum and service sector inflation above target, Riccadonna predicted that the Fed would be unlikely to cut rates until its June meeting, and that subsequent cuts would be gradual.

At the Global Macro Symposium, BNP Paribas’ Americas Head of Macro Strategy Calvin Tse said the US election could have a big impact on markets. He warned that a significant increase in fiscal spending, for example, could not only push inflation higher, but lead to a big increase in term premiums.

“We don’t rule out a scenario, if we see a red wave in November, where 10-year treasuries could be 100 basis points higher after the election,” he said.

Given current uncertainties about rates and the election, Tse said that there was little conviction on which way to trade, so investors are implementing inexpensive hedges and collecting carry wherever they can.

The view from investors

Despite uncertainty, investors highlighted several bright spots. One investor at the Transportation Conference noted that although the capital markets have been quiet for the aviation industry recently, there is significant private deal flow offering opportunities to participate in smaller bilateral and club deals.

The chief economist of a global asset manager told attendees at the Solutions Summit that even if economic conditions deteriorate this year, private capital providers still have substantial amounts of capital to put to work and could step in to provide funding.

At the Structured Derivatives Forum, BNP Paribas’ Structured Derivatives team and senior investment advisors participated in roundtable discussions about products tailored to today’s environment, such as price-efficient indices and alpha-warrants.

A group of annuity-distribution, product and hedging professionals at the Equity Derivatives (EQD) Insurance Solutions Client Summit discussed a number of innovative strategies, including S&P 500 Dynamic Intraday, a new equity replacement strategy developed by BNP Paribas, S&P Dow Jones and a leading independent marketing organisation (IMO) of insurance products.

The funding landscape

Although the outlook for the remainder of the year remains cloudy, funding conditions year-to-date have been broadly positive. Speaking to bank executives at the Yankee Bank Conference, Frederic Zorzi, BNP Paribas’ Global Head of Primary Markets, said that many banks were already well advanced with their 2024 Yankee bond issuance plans.

At the Insurance Conference, Monica Hanson, Head of Insurance Americas Coverage at BNP Paribas, said that the Bank had partnered with insurance clients across a wide range of structures and markets and noted the Bank’s focus on providing solutions for “the convergence of growth” in revenue production, risk management and capital raising.

Cybersecurity and AI

A panel of cybersecurity executives and chief information officers at the Technology, Media and Telecommunications (TMT) Conference discussed how companies can mitigate the increased risk of cyberattacks as AI becomes more prevalent.

“If you’re an entity of any size, there’s a 30% annualised chance that you will suffer a moderate to large cyberattack,” said one cybersecurity professional.

The good news, they said, is that AI could also help manage financial risks in the future. One leader in the AI space said that by running millions of different scenarios, AI simulation could reveal tail risks to baskets of financial products or assets that traditional mathematical simulations would not typically uncover. Participants in the Yankee Bank Conference heard that there were many additional applications for AI in banking, including classifying information and translating languages.

Sustainable finance in focus

The Bank’s leadership in sustainable financing solutions—particularly for renewable energy, clean tech and biodiversity—was also reflected at the summit.

Hervé Duteil, BNP Paribas’ Chief Sustainability Officer in the Americas, underscored how not only the transition to cleaner energy, but also the decarbonisation of hard-to-abate sectors, present an enormous investing opportunity—one that is starting to see a significant reallocation of capital.

In conversation with Anne Van Riel, Head of Sustainable Finance Capital Markets Americas at BNP Paribas, one corporate finance leader at a global technology company told attendees at the TMT conference that its green bond programme had saved the company somewhere between USD25 to USD30 million because of the tighter credit spreads available. She added that sustainability initiatives across the business had also made it much more efficient.

“We’ve always looked at sustainability as the notion of how you use your resources wisely, which is how you should be running your company from a financial and stakeholder perspective anyway,” she said.

Sharing the values of tennis

As a tennis sponsor for more than half a century, the summit also reinforced BNP Paribas’ commitment to tennis worldwide and highlighted the ways in which our sponsorship of tennis creates meaningful change in our communities.

“We want to share our passion of tennis with our best partners and clients,” said Jean-Yves Fillion, Vice-Chairman of the Board of Directors of BNP Paribas USA. “The values of tennis fit really well with those of the Bank. Our priority is to use our support of tennis to reach out to our communities and to help young people.” 

Since becoming the title sponsor of the BNP Paribas Open, the Bank has ensured that men and women receive equal prize money – long before other major tournaments. Each year, four scholarships of USD20,000 are awarded to graduating seniors in the Coachella Valley to support them in attending top California universities.

For every point scored during the BNP Paribas Open this year, the Bank donated one dollar to the Riverside County chapter of Girls on the Run, which works with girls across the Coachella Valley to boost their self-confidence and aspiration through physical activity.

Fillion also noted that BNP Paribas had been the title sponsor of the BNP Paribas Open— often dubbed the “fifth grand slam”—for 16 years, a period in which it has flourished and grown. This year’s record-breaking attendance totalled nearly half a million tennis fans at an event that added an estimated USD500 million in gross economic impact to the Coachella Valley regional economy.